XAU/USD: the interest in gold has grown

Current trend

Gold is getting investor support once again, and in view of this the metal has been growing since the beginning of the week. In the beginning of August the upward tendency has changed into the downward one, and gold moved to wide downward channel, and the tendency seemed likely to continue. However, the precious metal failed to consolidated in the downward trend, and today, having broken out the upper border of the channel, gold continued to grow. Currently the price has consolidated above the level of 1270.00. Rapid dynamics of growth indicates the surge of investors’ interest. The main catalyst for further movement will be the release of the data from the USA. Today and in the end of the trading week manufacturers price index, initial jobless claims, and consumer price index are due.

Support and resistance

Rapid price growth indicates growing volume of investors’ interest in the precious metal due to the reduction of the rate of the US currency and growing demand for safe haven assets. If the price for the metal breaks through the local maximum and the key resistance level of 1274.00, the quotes are expected to return to the upward tendency and move to local maximums of April (1292.00) and June (1295.75). On the other hand, consensus forecasts indicate the growth of inflation that is necessary for USD, and if they prove right, this will give support to USD.  In the short term the pair is expected to move to the level of 1275.00 and transfer to broad consolidation stage within the 1275.00-1262.00 channel. Technical indicators confirm the growth outlook: MACD shows growth in volume of long positions, and the upper line of Bollinger Bands indicates the next strong resistance level at 1283.00.

Support levels: 1262.00, 1256.00, 1254.00, 1251.00, 1243.50, 1240.00.

Resistance levels: 1270.00, 1275.00, 1280.00, 1283.00, 1292.00, 1295.75.

Trading tips

In the short term long positions will become relevant from the current level with targets at 1275.00, 1283.00. Stop-loss should be placed at 1266.00.


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